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Stick-built vs. production builder

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Mike Garrett RAA

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Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
In my market they are called "tract" or "custom" builders. Little, if any, difference in value within the median price range. As the price increases differences are usually noticable. Some of the worst work I have seen comes from a builder who only does one or two homes a year.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
I had an interesting conservation today concerning manufactured homes in this market area. My office is in a small office building on courthouse square. There are three offices in this building. A real estate lawyer, a title company, and mine. Today I was standing outside taking a cigar smoke break and an old builder I have known for 30 years came by going to the lawyer’s office.
He works for a developer of lots for doublewide manufactures homes. He said the manufactured home business is nothing but a con game racket. His company has 400 lots that they sell under contract for deed. The people buy the lots on contract and then buy a doublewide home from a sales lot and finance with some finance company. He said this market was in a real mess. He had a file in his hand on the case he was working on. They sold the lot to a woman who purchased a doublewide for $110,000 and installed it on the lot. Then she never made even the first payment. His company took the lot back six months ago and the finance company won’t remove the home. They have it listed at $60,000 considering she paid $110,000 about 8 months ago. He said they are a dime a dozen.
The way this subject came up was I had an assignment two weeks ago on a doublewide that the owner claimed he had $140,000 invested in including lot and add-ons. I axed if he had ever seen a doublewide in this market sell for over $100,000. He said yea, I have this one in my hand that sold for $110,000 eight months ago, but you can buy it today for $60,000. He said repo’s are a dime a dozen. The last one I apprised was a good quality doublewide on a rental lot. It was a repo and the finance company owned it, the loan balance was $55,000 on the loan and it was under contract at $15,000. I axed him how these people were getting these things financed. He said I have no idea. I think I have seen this finance company discussed on this board before.
Two years ago this market was smoking with sales lots wall to wall a few miles from where I live. This may well be the next scandal to break. Whitewater II. I am steering clear of this mess. The appraisal I mentioned above, I just told the bank I couldn't support a price estimate because no sale data was available.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Doug

after reading several others input here, if your talking about similar style homes in the same sub-division as "Track Builders" , we ahven't had them here since the 80's; they went the way of the Banks - and the only ones who survived were strong (looong green); they build pretty much what they want, from typical to the most custom you could desire.

And the debt on most range in the $200k to $400k and add to that the taxes and you have some really stiff monthly outlays. If Cal. & New England ever go bust at the same time, it'll be the downfall that shakes the world to the bone.

8)
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Austin,

Dear, you have come across the Conseco/Greentree/BofA/Duetsche etc. group of lenders. Tim(Texas), Bobby Bucks and a few others and I have been posting back and forth about this. Have seen this for at least two years in my market.

The buyers of these homes strolled into the dealership with bankruptcies, divorces, numerous co-signs for relatives, $500/mo dually truck payments on a $1600/mo income...you name it. Shouldn't have a mortgage in the first place. Scoring low 500's on your Fico/Beacon? How about a singlewide on these lots we have here for sale??

They pay off the existing whopper debts by bumping the invoice price of the home. Works for the debt ratios on the MH/land combo. Then to top it off they advertise 6.75% interest rates on land/home packages. Sure, to get that rate they charged 10-11% 'buy down' points financed into the balance. The "bump the invoice/pay off debt" racket was supposed to be a no no. However most of the manufactured lenders knew exactly what was taking place and turned their heads. These lenders are now enjoying a blood bath in repos. Homes that initially appraised? and sold for over $100K now sell for $25,000 to $50,000 in an area east of my home/office.

If you're into REO work, it makes for some interesting and plentiful assignments.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
Caterina: You hit the nail on the head. Conseco is the name of the finance company.

PS: How are they getting these things appraised? I visited a sales lot two weeks ago and they said they never had a low ball appraisal. They used some appraisal company from a town north of here and a few locals. Said the former manager brought two appraisers with him when he took the job. How are they getting away with this?
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
The part that troubles me the most is they are still at it. They still have a fresh crop of appraisers every year that will put their number on the deals with their made up sales. It is to the point where they are ignoring the 40+ REO sales in the neighborhood even though they can see them and they are published all over the MLS. This whole industry (land/manufactured home) should be shut down.


I just inspected one (REO) today. 1.278 SF MH on 2.5 acres. Appraised and sold 12/2001 for over $110,000. It will sell in the $40-60,000 range. $40-60,000 is low, but not nearly as high as the actual value when purchased the first time ($70,000 or so).

It is to the point that I am angry. It is fueling my business with REO work, but the appraisers who did the original appraisals should in jail. But no, they made $400 a pop to lie,cheat and steal.


I just ran across a "good" sale on the MLS. A 2,000 SF home on 1 acre for $128,000. They only way the got that to work is by hiring the original appraiser. He just kept on lying. I heard the listing agent talk about that was the only way to"save" the poor home owners from foreclosure. I think the "poor home owner" should let it foreclose and start a class action law suit. Just my opinion.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
One other thought. I know I have re-hashed this many times. If these homes were really worth this much, then wouldn't there be re-sales of existing homes that supported the values. There never are. There is one now that I just reported and it worries me that it will snowball. One sale does not make a market, except when the appraiser wants it to.


Also, I am on my 15th review for Freddie Mac. Not one of these appraisals is defendable. The cry of the offender, "I know that is wrong now and I don't do that any more." yeah right
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Tim--

Don't think it is only the new appraisers. I know an appraiser who has been appraising 20 years, MAI candidate for 10 years. He has been running subdivison appraisals for the big boys for some time. Huge volume. All the deals work. He is still a free man------and he makes a lot of money $$$$$.

So...................my contribution brings a question to mind.

How many appraisers are reflecting the market............and how many are assisting in the creation in the market? and to what extent?

If a $ 500,000 tract home is overvalued by 5,6,7,8% (closing costs and maybe some "upgrades") then the market is led to believe it is worth $ 25K to $ 40K more than it is.

And the sun sets, and the sun rises.
 
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